Senate President pushes drug bulk purchasing

Rosenberg wants to pool buying power with other states

CONCERNED ABOUT THE RISING COST of pharmaceuticals, Senate President Stanley Rosenberg is pushing a budget proposal that would direct the state to use bulk purchasing to negotiate lower prices with drug manufacturers.

The proposal builds on a House budget measure authorizing the state to purchase the drug naxalone, often marketed under the brand name Narcan, on behalf of municipal first-responder agencies.  Naxalone is used to reverse the effects of a heroin or opioid painkiller overdose. Prices of naxalone more than doubled earlier this year as police forces across the country began equipping officers with the drug.

Rosenberg’s initiative would also create a task force to explore whether Massachusetts should join other states in buying all sorts of pharmaceuticals in bulk. The task force would be charged with pooling the pharmaceutical needs of Massachusetts state agencies, counties, municipalities, and nonprofit organizations, including hospitals and nursing homes, and then merging that buying power with other states to negotiate directly with manufacturers to obtain the best possible prices.

Bulk purchasing of drugs is not a new concept. Massachusetts approved bulk buying more than a decade ago, but the program never got off the ground. Oregon and Washington participate in the Northwest Prescription Drug Consortium and Minnesota and dozens of other states are involved in the Minnesota Multistate Contracting Alliance for Pharmacy. Missouri led a multistate effort earlier this year to negotiate lower prices for the breakthrough hepatitis C drug Sovaldi, which costs $1,000 per pill, or $84,000 for a 12-week course of treatment.

In an interview, Rosenberg said pharmaceutical costs represent 10 to 15 percent of the typical person’s health insurance premium and the cost is rising 10 to 15 percent a year. He said he wants to see if the aggregation of drug purchasing on a large scale can be used to negotiate lower prices with pharmaceutical manufacturers, either by playing one off against another or simply cutting out the middle man on a drug under patent protection. “We want to use market forces,” Rosenberg said.

Pharmaceutical manufacturers say the high cost of prescription drugs reflects the high costs to research, develop, and market the products. But Rosenberg suggested huge profits are being made by some manufacturers. He said Gilead, the maker of Sovaldi, recovered the entire cost of development and marketing of the hepatitis C drug in one year.

All in all, we are told, $1.2 to $1.4 billion is the cost of a hit, meaning a drug that’s successful and widely used, and that includes all the misses,” Rosenberg said. “We’re told that for the real hits, and there are a substantial number of real hits, by the time you finish the 20-year protected period, you’re in excess of $140 billion against that initial $1.4 billion. That’s not every drug, but it’s a significant number of drugs.”

Rosenberg said the Sovaldi drug is also being sold in some foreign countries for far less, with pricing based on a country’s ability to pay. “This is the part that really galls people,” Rosenberg said. “The same drugs are being sold in other countries and other jurisdictions at a dramatically lower cost. So Sovaldi was $84,000 [in the United States] and it was $900 in Egypt for the same 12-week treatment.”

Gov. Charlie Baker is also interested in finding ways to negotiate lower drug prices. At a budget presentation in February, he said his administration was attempting to negotiate directly with Gilead for lower Sovaldi prices. Rosenberg said Baker also heard a presentation on bulk drug purchasing the Senate President gave at a Jobs for Massachusetts meeting and the two plan to discuss it further.

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Bruce Mohl

Editor, CommonWealth

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

The state’s Medicaid program is already guaranteed the lowest available public price on any drug, but Rosenberg’s budget amendment would require the program to investigate joining one of a handful of multistate bulk purchasing programs and to pursue rebates from pharmaceutical manufacturers. The Medicaid program is the state’s health insurance program for the poor and elderly.

The Senate Ways and Means Committee is scheduled to unveil its budget proposal for fiscal year 2016 on Tuesday and then the full Senate will take up the measure.